Good news for consumers!
The New York legislature enacted a law eradicating most healthcare liens in personal injury lawsuits. This means that an injured client will be able to keep more of his settlement. See General Obligations Law sec. 5-335.
Prior to this law, all health insurers and health maintainance organizations claimed a lien on a settlement. That means the health insurer would get back its money out of the client’s settlement. The lien would be for money that the insurer spent for medical care. This was legal because every healthcare insurer inserted lien language in the health insurance policies.
This has been a double whammy against clients. First, they paid for their health insurance. Health insurance is part of an employee’s compensation whether provided “free” to the employee or at a partial cost to the worker. Second, under New York law we could not recoup these medical bills paid by insurance. As a result, the injured client would have to reimburse his health insurer out of his settlement even though we could not recover the cost of the medical bills in the settlement.
The new law eradicates these liens. Now, if a case settles, the health insurer is not entitled to share in the settlement. The client now keeps all of his settlement.
Liens still exist under the following exceptions:
- A case goes to verdict. The eradication of healthcare liens applies only to settlements. In the event of a full trial to verdict, the injured client can prove and recover the amount of medical bills so that the healthcare insurer’s lien can be honored without taking away from the client’s net recovery.
- “Self-funded” health plans under ERISA. If the client’s medical care were paid through a “self-funded” health insurance plan under ERISA, then a lien is created under federal law. A “self-funded” plan would be a health insurance plan where the employer funds the plan rather than buy a group insurance policy. Generally, only large, national employers (such as JP Morgan Chase or Walmart) fund their health plans rather than buy insurance. This distinction will be discussed in more detail in a future post.
- Medicare. Liens still exist for medical care provided for the injuries under Medicare.
- Medicaid. The City would still have a lien for medical care provided under its Medicaid program.
The law took effect for all settlements entered into and after November 12, 2009. Unfortunately, it has no retroactive effect for settlements before that date.
If you have been injured in an accident, please feel free to contact me for a free consultation at either 800-581-1434 or write to firstname.lastname@example.org.
Mark E. Seitelman, 4/19/10.